Price negotiating for services: elucidating the ambivalent effects on customers’ negotiation aspirations

Although customers frequently negotiate the prices of both goods and services, academic research has mostly examined negotiations in goods contexts, neglecting the fact that negotiations for services may be different. This study examines the consequences of customers’ price negotiation behavior rela...

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Bibliographic Details
Published in:Journal of the Academy of Marketing Science 2020-03, Vol.48 (2), p.165-185
Main Authors: Alavi, Sascha, Habel, Johannes, Schwenke, Marco, Schmitz, Christian
Format: Article
Language:English
Subjects:
Business and Management
Client development
Customer relations
Management
Marketing
Negotiations
Original Empirical Research
Prices and rates
Services industry
Social Sciences
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Summary:Although customers frequently negotiate the prices of both goods and services, academic research has mostly examined negotiations in goods contexts, neglecting the fact that negotiations for services may be different. This study examines the consequences of customers’ price negotiation behavior relating to services as compared to goods. Using five empirical studies with field and experimental data, the authors show that services exert ambivalent effects. First, the heterogeneity intrinsic to services leads customers to aspire to better negotiation outcomes because customers perceive higher risk and regard negotiation as more legitimate, particularly if services are customized. Second, the inseparability of services leads customers to lower their negotiation aspirations because they fear negative consequences, particularly if customers are closely integrated in the service process. Building on these findings, the authors conceptualize and test communication strategies that diminish customers’ negotiation aspirations. Study results provide actionable recommendations for managers and salespeople in service industries.
ISSN:0092-0703
1552-7824
DOI:10.1007/s11747-019-00676-4